Wednesday, October 20, 2010

Class Action Claims Loan Servicer Pocketed Payments From Financially Strapped Homeowners In Exchange For 'Bad Faith' Loan Modification Promises

In Los Angeles, California, Courthouse News Service reports:

  • Indymac Bank and its successor, OneWest Bank, defrauded homebuyers by promising to modify their mortgages, but "never at any time possessed a good faith intention to perform on these loan modification agreements," a class action claims in Superior Court. "Defendant sought only to induce homeowners into making further payments and defraud homeowners of their money."


  • "Hoping to keep their homes, thousands of defaulted borrowers relied upon defendants' promises and paid to defendants significant amounts of money that they would not otherwise have paid, had they known that defendants did not possess a good faith intention to perform pursuant to the loan modification letter agreements. ...


  • The class seeks promissory estoppel(1) and punitive damages for fraud, breach of contract, breach of faith, unjust enrichment, negligent misrepresentation, and business code violations.

For more, see Class Claims Indymac Bank Hustled Them.

(1) See Court: "Promissory Estoppel" Could Make Lender’s Verbal Agreement To Halt F'closure Sale Enforceable, Even Absent Consideration For Promise To Stall, where a California appeals court earlier this year applied the doctrine of promissory estoppel to hold a lender to its verbal agreement with a borrower to halt a foreclosure sale, even though there was no contractual obligation for the lender to do so (ie. the borrower paid no consideration in exchange for the lender’s promise to postpone).

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